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MGMT 140
Exam 1
| Question | Answer |
|---|---|
| Goods | Tangible products such as computers, food, clothing, cars and appliences |
| Services | Intangible products (cannot be held in your hand) like ducation, healthcare, insurance, recreation and travel |
| Revenue | The total amount of money a business takes in during a given period by selling goods and services. |
| profit | The amount of money a business earns above and beyond what it spends for salaries and other expenses. |
| Loss | occurs when a business's expenses are more than its revenues |
| Business | Any activity that seeks to provide goods and services to others while operating at a profit. |
| Entrepreneur | A person who risk time and moneu to start and manage a business. |
| Risk | The chance an entrepreneur takes of losing time and money on a business that may not prove profitable. |
| What are taxes used to provide? | hospitals, schools, libraries, playgrounds, roads, fire protection, police protection, environmental programs, support for people in need. |
| Quality of life | The general well-being of a society in terms of its political freedom, natural environment, education, healthcare, safety, amount of leisure and rewards that add to personal satisfaction. |
| Outsourcing | Contracting with other companies (often outside of the country) to do some of the firm's functions, like production or accounting. |
| Insourcing | Foreign companies opening offices and factories in the United States. |
| Standard of Living | The amount of goods and services people can buy with the money they have. |
| Stakeholders | All the peoople who stand to gain or lose by the policies and activities of a business and whose concerns the businesses need to address. |
| Who are Stakeholders? | customers, employees, stockholders, suppliers, dealers, community members, media, elected officals, bankers, environmentalist. |
| Nonprofit Organization | An organization whose goals do not include making a personal profit for its owners or organizers. |
| Ups of Entrepreneurship | Freedom to succeed, Make your own decisions, High possibility of wealth, hire your own staff. |
| Downs of Entrepreneurship | Freedom to fail, No paid vacations, No health insurance, No daycare |
| 5 factors of PRODUCTION | Land, Labor, Capital, Entrepreneurship, Knowledge |
| Technology | Everything from phones to copiers and the various software programs that make businesses more effective, efficient and productive. |
| Effectiveness | Producing the desired result. |
| Efficiency | Producing goods and services using the least amount of resources. |
| Productivity | The amount of output you generate given the amount of input. (example: hours you work) |
| E-commerce | The buying and selling of goods on the internet |
| Database | An electronic storage file for information |
| Identity Theft | The obtaining of individuals' personal info, such as social security and credit card #'s, for illegal purposes. |
| What are some Important changes to the Global Environment? | Growth of global competition, Increase of free trade among nations, development of efficient distribution systems, advances in communication systems. |
| What increases cost of the global environment? | Wars cost billions of dollars to an economy, tax money is diverted, cost of security goes up, cost of insurance goes up. |
| What are the evolving eras of business? (oldest to most recent) | Agriculture era --> Manufacturing era --> Service Era --> Information-Based Era |
| Some characteristics of the Agricultural Era are... | In the 1800's Agriculture led economic development || Technology like the harvester and cotton gin made farming more efficient || Tech lead to fewer farms with bigger farms |
| Some characteristics of the Service Era are... | make up about 70% of the US economy || since the mid 1980's service industry gerated almost all increases in employment || more high paying jobs in the service industries |
| Some characteristics of the Manufacturing Era are... | Moved jobs from farms to factories || as technology increased the need for human workers in factories decreased |
| Some characteristics of the IT Era are... | IT affects every other era (Agricultural, Industry, and Service) |
| Resource Development | The study of how to increase resources and create conditions that wil lmake better use of them |
| Economics | The study of how society employs resources to produce goods and services for consumption among various groups of individuals. |
| Macroeconomics | Concentrates on the operation of a nation's economy as a whole. |
| Microeconomics | Concentrates on the behavior of people and organizations in the markets for particualar products and servics. |
| Adam Smith (Father of Economics) believed that... | Freedom was viatal to any economy's survival || Freedom to won land or property and the right to keep the profits of a business is essential || People will work hard if they believe they will be rewarded. |
| The Invisible Hand Theory | As people improve their own situation in life, they help the economy prosper through the production of goods, services and ideas. |
| Capitalism | All or most of the land, factories and stores are owned by individuals, not the government, and operated for profit. |
| Countries with capitalist economies include... | United States, England, Australia, Canada |
| What are Capitalism's Four Basic Rights? | The right to own private property || The right to own a business and keep all of that businesses profits || The right to freedom of competition || The right to freedom of choice |
| State Capitalism | When the state, rather than private owners, run some businesses (Esamples: China & Russia) |
| What were Roosevelt's 4 additional rights? | Freedom of speech and expression || Freedom to worship in your own way || Freedom to want || Freedom to fear |
| Free Markets | Decisons about what and how much to produce are made by the market. |
| Supply | The quantities of products businesses are willing to sell at different prices. |
| Market Price (Equilibrium point) | Determinded by supply and demand, this is the negotiated price. |
| Demand | The quantities of products consumers are willing to buy at different prices. |
| What are 4 degrees of competiton? | Perfect competition || Monopolistic Competition || Oligopoly || Monopoly |
| Socialism | An economic system based on the premise that some basic businesses, like utilities, should be owned by the government in order to more evenly distribute profits among the people. |
| Benefits of Socialism include... | Social equality, Free education, Free healthcare, Free Childcare, Longer vacations, shorter work weeks, generous sick leave. |
| Negatives of Socialism include... | few incentives for business people to take risk || Brain drain: Some of a country's best and brightest workers (doctors, lawyers, business owners) move to a captialistic country. |
| Communism | An economic and political system in which the government makes almost all economic decisions and owns almost all the major facotrs of production |
| Mixed Economies | Some allocation of resourcs is made by the market and some by the government |
| 2 Major economic systems include... | Free-Market Economies & Command Economies |
| Free-Market Economy | The market largely determines what goods and services are produced, who gets them, and how the economy grows |
| Command Economy | The government largerly determins what goods and services are produced, who gets them, and how the economy will grow |
| Gross Domestic Product (GDP) | Total value of final goods and services produced in a country in a given year. As long as a company is within a country's border, their numers go into the country's GDP (even if its a foreign owned company) |
| Unemployment rate | The percentage of civilians at least 16 years old who are unemplyed and tried to find a job within the prior 4 weeks |
| 4 different types of unemployment are... | frictional, Structural, Cyclical, Seasonal |
| Inflation | The gernarl rise in the prices of goods and services over tim |
| Disinflation | when the price increases are slowing |
| Deflation | prices are declining because too few dollars are chasing too many goods |
| Stagflation | Economy is slowing, but pries are going up. |
| Consumer Price Index (CPI) | Monthly statisitics that measure the pace of inflation or deflation. |
| Business cycles | Periodic rises and falls that occur in economies over time |
| Four Phases of Long-Term Business Cycles include... | Economoic Boom, Recession (two or more consecutive quarters of decline in GDP), Depression (A severe recession), Recoevery (When the economy stabilizes and starts to grow. This leads to an Economic Boom) |
| Producer Price Index (PPI) | An index that measures prices at the wholesale level. |
| Fiscal Policy | The federal government's efforts to keep the exonomy stable by increasing or decreasing taxes or government spending. |
| 2 tools of Fiscal Policy include... | Taxation & Government spending |
| National Deficit | The amount of money the federal government spends beyond what it gathers in taxes. |
| National Debt | The sum of governent deficits over time |
| National Surplus | When government takes in more than it spends |
| Monetary policy | The management of the money supply and interest rates by the federal Reserve Bank. |
| Importing | Buying products from another country |
| Exporting | Selling products to another country |
| Free Trade | The movement of goods and services among nations without political or economic barriers. |
| Balance of Payments | The difference between money coming into a courntry (from exports) and money leaving the country (from imports) plus other money flows.(Goal is to have more money flowing inot a country than out. This is called a favorable balance) |
| Licensiing | When a firm (licensor) provides the right to manufacture its product or use its trademark to a foreign company (licensee) for a fee (royalty) |
| Pros of exporting include... | Exporting provides a greeat boost in the US economy || It's estimated every $1 billion in US exports generates over 7000 US jobs. |
| Franchising | A contractual agreement whereby someone with a good idea for a business sells others th rights to use the name and sell a product/service in a given area. |
| Contract Manufacturing | A foreign company produces private-label goods to which a domestic company then attaches its own brand name or trademark. A from of outsourcing |
| Joint Venture | A partnership in which two or more companies join to undertake a major project. |
| Strategic Alliance | A long-term partnership between two or more companies established to help each company build competitive market advantages |
| Multinational Corporation | A company that manufactures and markets products in many different countries and has multinational stock ownership and management |
| Foreign Direct Investment (FDI) | The buying of permanent property and businesses in foreign nations |
| Foreign Subsidary | A company owned in a foreign country by another ocmpany called the parent company. The most common form of FDI |
| 4 Forces affecting global trade inclulde... | Sociocultural, Economic and financial, Legal and regulatory, physical and environmental |
| Tariffs | Taxes on imports, making imported goods more expensive |
| Two different kinds of tariffs include... | Protective (Raise the retail price of imports so domestic goods are copetitively priceds), Revenue (Raise money for the governments) |
| Trade Protectionism | The use of government regulations to limit the import of goods and services. |
| Import quota | Limits the numver of products in certain categories a nation can import |
| Embargo | A complete ban on the import or export of a certain product or the stopping of all trade with a particular country |
| General Agreement on Tariffs and Trade (GATT) | A global forum for reducing trade restrictions on goods, services, ideas and cultural problems. |
| World Trade Organizaions (WTO) | Heardquartered in Geneva, the WTO is an independent entity of 153 member nations whose purpose is to oversee cross-border trade issues and global business practices |
| Central American Free Trade Agreement | Passed in 2005, created a free trade zone with Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua. |
| Common Market | A regional group of countries with a common external tariff, no internal tariffs an dcoordinated laws to facilitate exchange among members. |
| North American Free Trade Agreement | Ratified in 1994, created a free-trade area among the united states, candad and mexico |
| Multinational Corporation | A company that manufactures an dmarkets products in many different countries and has multinational stock ownership and management |
| Foreign Direct Investment (FDI) | The buying of permanent property and businesses in foreign nations |
| Foreign Subsidary | A company owned in a foreign country by another company called the parent company. The most common form of FDI |
| Tariffs | Taxes on imports, making imported goods more expensive |
| 2 different kinds of tariffs include... | Protective (Raise the retail price of imports so domestic goods are competitively priced), Revenue (Raise money for governments) |
| Trade Protectionism | The use of governemtn regulations to limit the import of goods and services |
| Import Quota | Limits the number of products in certain categories a nation can import. |
| Embargo | A complete ban on the import or export of a certain product or the stopping of all trade with a particular country. |
| General Agreement on Tariffs and Trade (GATT) | A globabl forum for reducing trade restrictions on goods, services, ideas and cultural problems. |
| World Trade Organization (WTO) | An independent entity of 153 member nations whose purpose is to oversee cross-border trade issues and global business practices |
| Central American Free Trade Agreement | Passed in 2005, created a free-trade zone with Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua |
| Common Market | A regional group of countries with a common exteranal tariff, no internal tariffs and coordinated laws to facilitate exchange among members |
| North American Trade Agreement | Created a free-trade area among the US, Canada, and Mexico |
| Ethics | The standards of moral behavior. Behaviors that are accepted by sociated as right versus wrong. |
| Whistle Blowers | Insiders who report illegal or unethical behavior within a company |
| Corporate Philantrhopy | Includes charitable donations |
| Corporate social Initiatives | Include enhanced forms of corportate Philanthropy |
| Corporated Social Responsibility (CSR) | The concern businesses have for the welfare of society |
| Corporate Responsibility | Includes everything from hiring minority workers to making safe products, minimizing pollution, using energy wisely, and providing a safe work environment |
| Corportate Policy | The position a firm takes on social and political issues |
| President Kennedy's Basic Rights of Consumers included... | The right to safety, The right to be informed, The right to choose, The right to be heard. |
| Insider Trading | Insiders using private company information to further their own fortunes or those of their family and friends. |
| Social Audit | A systematic evaluation of an organization's progress toward implementing socially responsible and responsive programs. |
| Five types of social audit watchdogs include... | Socially conscious investors || Socially conscious research organizations || Environmentalist || Union officials || Customers |
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